Public hearing set on city's proposed financing package for new arena

Don Walker is on a fellowship established through Marquette University Law School's Sheldon B. Lubar Fund for Public Policy Research. The fellowship is aimed at providing support for journalism projects on issues of civic importance. All the work is done under the direction of Journal Sentinel editors.

Mayor Tom Barrett's proposal to spend $47 million as part of the $250 million public financing package for a new Milwaukee Bucks arena will have its first public hearing in two weeks.

The city plan won't be implemented without the Wisconsin Legislature's approval of the state's larger share of that public financing package for the $500 million arena, Barrett said Thursday. Bipartisan opposition has stalled that state proposal.

Meanwhile, Barrett said, it's important for the city proposal to undergo public review. The first hearing will be at the Redevelopment Authority's July 2 meeting, giving the Common Council an opportunity to review the plan that month.

"We're setting the wheels in motion," Barrett said.

Ald. Bob Bauman, whose district includes downtown, said the council shouldn't act before the Legislature makes a decision. That could delay council review until this fall, even as the Bucks hope to begin construction this year to open the arena by the 2017-'18 National Basketball Association season.

The financing proposal's major points have already been disclosed. But there are new details, including estimates on when the city's cash would be repaid.

The city would spend $35 million to develop a 1,243-space parking structure north of W. Juneau Ave. and east of N. 6th St., in the Park East strip.

It would serve the new arena, to be built north of the BMO Harris Bradley Center, on what's now mainly parking lots south of W. Juneau Ave., between N. 4th and N. 6th streets. It also would provide parking for future adjacent offices, apartments and other commercial space envisioned by a Bucks-affiliated development group, Head of the Herd LLC.

The city and the Bucks would share a 50-50 split of that parking structure's revenue. It would replace a 1,000-space parking structure, east of N. 4th St. between W. Highland and W. Juneau avenues, where the Bucks plan to build an entertainment center featuring restaurants and taverns.

The city would give that parking structure, valued at $7 million, to the Bucks, Barrett said.

The city also would spend $12 million to pay for public plaza space within the entertainment center, which would be covered by a canopy, and on other public improvements near the arena, Barrett said.

Those improvements include converting N. 4th St., between W. Highland and W. Juneau avenues, to a public plaza between the arena and entertainment center; reopening N. 5th St. between W. Juneau and W. McKinley avenues, and resurfacing streets near the new arena, he said.

The $12 million would be repaid through property taxes from new commercial development near the arena. That would occur within a new tax incremental financing district bordered roughly by W. Vliet St., W. Kilbourn Ave., the Milwaukee River and N. 6th St.

Those funds would be repaid within 15 years, according to a Department of City Development estimate. Once that city debt is paid off, the new property taxes would flow to the city's general fund, Milwaukee Public Schools and other local governments.

That estimated payback period is based only on the first phase of development planned within the tax financing district, Barrett said. That includes the entertainment center and a Bucks practice facility, to be built in the Park East strip west of N. 6th St. Additional commercial development would speed up the payback period.

The $35 million parking structure would be partly financed with $27 million generated by property taxes on developments within a current tax incremental financing district along N. Commerce St., north of downtown.

That tax financing district is scheduled to finish paying this year the city's $32 million debt from reconstructing Commerce St., building a nearby RiverWalk and making other public improvements. That work was tied to development of apartments and condominiums, valued at $172.6 million, along the Milwaukee River's west bank north of downtown.

Property taxes from those developments would pay back the city's new $27 million debt, and interest of $1.2 million, within an estimated five years.

The Bucks would provide the additional $8 million to pay for the parking structure.

That money, plus interest, would eventually be repaid to the Bucks through property taxes from new development within the arena tax financing district. But the Bucks wouldn't receive those funds until after the city's $12 million debt, plus interest, is repaid through those property taxes.

The city's estimated interest on the arena tax financing district debt would total $18.7 million.

The development agreement with the Bucks would include arena, entertainment center and parking structure construction hiring requirements for small businesses and city residents, Barrett said. It requires 25% of the entertainment center's businesses be based in Milwaukee.

It should include requirements to make sure the businesses located within the entertainment center pay a living wage and hire a fair share of Milwaukee residents, Bauman said.

Also, the city should lay track for a planned expansion of the downtown streetcar while it's resurfacing W. Juneau Ave. and N. 4th St., said Bauman, who chairs the Common Council's Public Works Committee.

Barrett negotiated "relatively well" with the Bucks on the city's share of the public financing package, said Ald. Nik Kovac, chair of the Finance and Personnel Committee.

But, he said, the proposal should include a provision allowing the city to share in the Bucks' profit if the owners eventually sell the team. That value could increase substantially within a decade after a new arena is built, Kovac said.